ICICI Bank transactions on Flipkart-owned PhonePe wallet have been blocked

While digital wallets are slowly becoming mainstream, it looks like banks are still not convinced of the same. After it emerged that **State Bank of India had blocked transactions** on many digital wallets, it is now learned that ICICI Bank too has blocked any transactions on Flipkart-owned digital wallet PhonePe. According to a Business Standard report, ICICI Bank is accusing PhonePe of indulging in restrictive practices and breaking the unified payments interface (UPI) guidelines of interoperability. “This entity (PhonePe) is following restrictive practices allowing users to make payments with only its UPI handle, which is in contravention to the UPI guidelines of interoperability and choice that empowers a customer to choose any app to make payments through UPI,” said ICICI Bank in its statement. It also stated that it has raised security-related concerns at the appropriate forums when it comes to giving a non-banking application access to UPI data. https://twitter.com/_sameernigam/status/820221128379613185 PhonePe, which is **owned by Flipkart** , uses Yes Bank to authorise UPI transactions. This is because according to the current regulations, only licensed banks are allowed to access the UPI payments system. This allows any customer to use any bank’s UPI address to conduct transactions. The transactions through ICICI Bank have been blocked on PhonePe since Friday. Sameer Nigam, the CEO of PhonePe and Payments Unit at Flipkart, made his displeasure clear on Twitter on 14 Jan. He also claimed that PhonePe did not receive any intimation from ICICI Bank before blocking transactions. Speaking to Business Standard, Nigam said that PhonePe did not receive any official notice from NPCI or its banking partner Yes Bank regarding this issue. “Since Friday afternoon, ICICI Bank has blocked all their customers from using PhonePe, and even blocked any other bank’s customers from sending money to ICICI Bank’s customers using PhonePe,” said Nigam. After public-sector State Bank of India, ICICI Bank is one of the top private lenders in the country. Post the demonetisation move by the prime minister on 8 November 2016, digital payments wallets such as Paytm, Freecharge, PhonePe have been conducting record number of transactions and getting in new users on a daily basis. Two mainstream banks blocking transactions via these apps, reeks of insecurity. According to this Economic Times report, banks are losing a large chunk of their retail payments share to mobile wallets. They do not want wallets from accessing the UPI-based payments system. But wallet apps such as Trupay and PhonePe use the banking APIs to access UPI based payments systems. For instance, SBI and HDFC offer the baking backend on Trupay along with 26 other banks, whereas Yes Bank offers it on PhonePe. ICICI Bank has recently launched its own digital wallet called Eazypay which allows merchants, retailers and professionals to accept instant cashless payments through their customers. It also offers UPI based payments. PhonePe in addition to letting you conduct UPI based transactions involving sending and receiving money, also lets you pay for your utility bills, recharge mobile phone, DTH, Broadband bills and so on. Speaking to BGR India, an ICICI spokesperson said that ICICI Bank is committed to support UPI and interoperability. It said that ICICI Bank customers as well as non-customers can use BHIM app and its mobile banking apps to link any of their bank accounts with participating UPI banks.